The companies also plan to collaborate on research and development for new chips needed to power electric vehicles, autonomous driving systems and other future technologies, said Mike Hogan, GlobalFoundries’ senior vice president of automotive.
The collaboration shows the increasing importance of semiconductors to the auto industry. Carmakers in years past largely used chips of older designs and left sourcing to their parts suppliers, which would buy the chips and build them into automotive components, such as power windows or dashboard displays. Often, car executives did not know much about where the chips came from, auto consultants say.
The costs have been huge: The global auto industry will produce 7.7 million fewer vehicles this year because of the chip shortage, costing it $210 billion of revenue, according to consulting firm AlixPartners.
The related collapse in auto sales to consumers shaved more than two percentage points from U.S. GDP growth in the third quarter.
“It’s critical that we create new ways of working with suppliers to give Ford — and America — greater independence in delivering the technologies and features our customers will most value in the future,” Ford president and chief executive Jim Farley said in a statement.
Ford doesn’t currently conduct chip-related research and development in-house but is working to develop that expertise, spokeswoman Jennifer Flake said.
Though details are still in flux, “I think what we’re hoping to do is work together jointly on R & D for a specific chip made just for Ford’s needs,” she said. “And likely [Ford] would say to GlobalFoundries, ‘You guys have the manufacturing expertise, you should go and manufacture it.’”
Any chips for Ford would likely be made at the GlobalFoundries factory in Malta, Hogan said.
Semiconductors are the brains behind an increasing number of commonly used consumer devices, from smartphones and laptops to kitchen appliances, vacuum cleaners and automobiles.
In recent decades, semiconductor technology largely evolved to fit the needs of the personal-computer industry, then cellphone and smartphone makers, Hogan said.
Automakers were “sort of happy to benefit from whatever technology happened to have been created,” he said. “And they would find a way for their supply chain to use those devices to accomplish a different goal. So the same microcontroller that might have been in a toaster oven was modified to go in and move your window up and down.”
But as the automotive industry develops a new generation of vehicles, including electric and autonomous cars, it has a greater need to design its own chips, Hogan said. Special semiconductors to manage power supply in battery-operated cars will be a top priority, he said.
Tesla already designs its own semiconductors, he said, and other automakers will follow.
In an interview this year, GlobalFoundries Chief Executive Tom Caulfield said the chipmaker was exploring deals with automakers that wanted to help finance expansion of chip production in exchange for secure supply. Hogan said the Ford deal does not preclude the chipmaker from working with other car companies.
Chipmaking giant Intel, based in Santa Clara, Calif., said earlier this year it was talking to automakers and auto-parts suppliers about steps it can take to increase automotive chip production. The company didn’t immediately respond to a request for an update on Thursday.
GlobalFoundries, majority-owned by the investment arm of the Abu Dhabi government, which is separate from the United Arab Emirates’ government, runs large semiconductor factories in Malta, N.Y.; Dresden, Germany; and Singapore.
In a statement Thursday, Caulfield called the deal “a key step forward in strengthening our cooperation and partnership with automakers to spur innovation, bring new features to market faster, and ensure long-term, supply-demand balance.”
President Biden has labeled the chip shortage a “dangerous weak spot in our economy” and signed an executive order earlier this year seeking to address it.
Semiconductors are in short supply in part because chip factories are so expensive to build. It can cost $10 billion or more to build and outfit one of the plants with the specialized machinery required. That expense and the dire need for chips have prompted many countries to boost subsidies for manufacturers.
GlobalFoundries has said it wants to double production capacity in Malta in the coming years with funding from the company, its customers and the federal government, which could gain the authority to subsidize chip manufacturing if Congress passes legislation currently under consideration.